Building A Strong Foundation With A Business Formation Attorney
Starting a business is exciting. But before you can grow your venture, you need to make sure you are laying the proper foundation. You must make countless decisions, both big and small, for the process to go smoothly. Forming a legal entity is one of these crucial steps.
The right legal guidance can help you make informed decisions during this crucial time for your business. Our business formation lawyers at Brown Borkowski & Morrow can help Michigan entrepreneurs in Detroit, Farmington Hills and beyond put their best foot forward. Don’t wait, contact our lawyers today at 888-757-1681 or by filling out our online form.
Choosing The Right Entity Formation For Your Business
Selecting a legal entity is an essential step for business owners to take. The entity you choose can create a framework within which your business operates effectively, protects you from liability, has tax benefits, and projects an image of professionalism. Making the right selection is crucial to accomplishing your goals for your business.
Types Of Business Structures
The most common business entities are:
Corporation
A corporation is a legal entity that – while entirely separate from the individuals who own it – functions similarly to a person in the eyes of the law. One particularly attractive benefit starting a corporation offers business owners is limited debt liability, which frees them from being personally responsible for debts the corporation incurs. Setting up a corporation could include many different subtypes of corporations, including:
- C Corp
- S Corp
- B Corp
- Close corporation
- Nonprofit corporation
- Cooperative
Each type of corporation brings different benefits to a business. For example, C corporations operate very differently from other choices for incorporation and pay taxes through income taxes and when they are paid as dividends to investors. This structure can easily attract investors, allowing for high growth potential. Furthermore, the tax status of a C corporation easily allows the profits of the business to be reinvested into the business.
Limited Liability Company (LLC’s)
As the name suggests, an LLC is similar to a corporation but grants a greater degree of personal protection from liability for its members. If you are worried about getting sued or incurring debt, an LLC may be a good option for your business. This is true even if you have no partners or investors and you will be the sole member.
Setting up an LLC shares similar characteristics with both corporations and partnerships. While this structure limits personal liability, a limited liability company is also relatively easy to operate compared to corporations. The way taxes work in an LLC is more similar to a partnership.
However, there is at least one drawback to establishing this type of structure. If you want to secure investors for your business, most prefer to put their money into established corporations.
Partnership
A partnership represents a legal agreement between two people to operate a business, split profits, and share responsibility for liabilities. Unlike a corporation or an LLC, each member of a partnership is personally liable for debts incurred. However, a partnership could have more tax benefits than a corporation.
There are several types of partnerships, each with their own characteristics. For example, limited liability partnerships grant you a certain measure of protection from liability for the debts and obligations of the partnership, unlike a traditional partnership. There are also types of partnerships, such as limited partnerships, in which not all partners have equal decision-making power or degrees of liability.
Sole Proprietorship
A sole proprietorship is the simplest business structure. As the name suggests, these entities consist of a single person. In a sole proprietorship, your personal and business finances aren’t separate, but it offers tax benefits you wouldn’t usually have.
Why Should You Hire A Lawyer For Business Formation?
These days, online services like LegalZoom make creating a business entity quick and easy. But the value of going this route is equal to the time and money you invest – very little.
When you work with a legal professional, you get:
- Robust knowledge
- Individualized guidance
- Ongoing support
A business formation attorney can ensure the entity you choose works for your business and puts you closer to reaching your goals.
What Are The Long-Term Benefits Of Hiring A Business Formation Attorney?
While you may not think that hiring a business attorney is a necessary step in your business formation plan, the truth of the matter is that it can provide valuable benefits. An initial investment in a business attorney when you first form your company can help you save in the long run. You can move forward successfully rather than have to pick up the pieces when you run into a legal issue.
One important reason to bring an attorney on board at the very beginning of your business formation is that you can ensure that you have set up your business correctly. This ensures a smooth process without unexpected legal hassles or surprises that could cost you time and money.
Furthermore, hiring an attorney at the very start is a smart move because it often is the beginning of a lasting business partnership. Many legal questions and issues can arise while running your company. The last thing you ever want to do as a business owner is have to scramble to find a lawyer in a rush and panic when a legal crisis occurs. Having a trusted relationship with a business attorney for the life of your company means you always have a valuable resource to turn to for any legal matters that may arise.
Talk To A Business Formation Lawyer Today
Our attorneys are here to help you explore the different business structures and form the correct entity for you. To get started, contact us to schedule a free consultation. You can reach our firm at 888-757-1681 or submit an appointment request form online.